Paragon Shipping Inc.
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(Translation of registrant's name into English)
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15 Karamanli Ave., GR 166 73, Voula, Greece
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(Address of principal executive office)
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Paragon Shipping Inc.
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Dated: January 9, 2013
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By:
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/s/ Michael Bodouroglou
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Name:
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Michael Bodouroglou
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Title:
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Chairman, President, Chief Executive Officer and Interim Chief Financial Officer
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Transactions with Related Parties (Table) (Details) (USD $)
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9 Months Ended | |
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Sep. 30, 2012
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Sep. 30, 2011
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Related Party Transaction [Line Items] | ||
Charter hire commissions | $ 2,180,754 | $ 4,225,049 |
Management fees - related party | ||
Total Management fees | 2,989,520 | 3,789,819 |
Allseas Marine SA
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Related Party Transaction [Line Items] | ||
Charter hire commissions | 480,707 | 918,371 |
Vessel sale & purchase commissions | 0 | 1,951,028 |
Total Allseas commissions | 480,707 | 2,869,399 |
Included in Vessel operating expenses | ||
Superintendent fees | 277,559 | 213,259 |
Included in Dry-docking expenses | ||
Superintendent fees | 0 | 81,622 |
Management fees - related party | ||
Management fees | 2,496,622 | 3,151,146 |
Legal, accounting and finance fees | 492,898 | 390,257 |
Loretto agreement | 0 | 248,416 |
Total Management fees | 2,989,520 | 3,789,819 |
Included in General and Administrative expenses | ||
Administrative Fees | 26,422 | 25,332 |
Executive services agreement | $ 2,412,021 | $ 2,658,013 |
Fair Value Disclosures - Summary of Valuation of KLC Shares (Table) (Details) (USD $)
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9 Months Ended | ||
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Sep. 30, 2012
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Sep. 30, 2011
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Dec. 31, 2011
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Derivatives Fair Value [Line Items] | |||
KLC Shares - Marketable Securities | $ 414,235 | $ 0 | |
KLC Shares - Marketable Securities (Loss) | 980,430 | 0 | |
Quoted Prices in Active Markets (Level 1)
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Derivatives Fair Value [Line Items] | |||
KLC Shares - Marketable Securities | $ 414,235 |
Fair Value Disclosures - Balance Sheet Location (Table) (Details) (USD $)
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Sep. 30, 2012
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Dec. 31, 2011
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Derivatives designated as hedging instruments | ||
Subtotal | $ 2,572,097 | $ 0 |
Derivatives not designated as hedging instruments | ||
Subtotal | 758,024 | 3,897,519 |
Total derivatives | 3,330,121 | 3,897,519 |
Current liabilities - Interest rate swaps
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Derivatives designated as hedging instruments | ||
Interest rate swaps | 2,572,097 | 0 |
Derivatives not designated as hedging instruments | ||
Interest rate swaps | 758,024 | 2,630,574 |
Long-Term Liabilities - Interest rate swaps
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Derivatives designated as hedging instruments | ||
Interest rate swaps | 0 | 0 |
Derivatives not designated as hedging instruments | ||
Interest rate swaps | $ 0 | $ 1,266,945 |
Number Of KLC Shares (Details)
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5 Months Ended |
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May 24, 2012
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Marketable Securities [Abstract] | |
Number of shares received from KLC | 111,201 |
Long-Term Debt (Details)
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9 Months Ended |
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Sep. 30, 2012
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Commerzbank AG
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Debt Instrument [Line Items] | |
Covenant Compliance | Commerzbank AG (Loan agreement dated August 12, 2011). As of September 30, 2012, the Company was not in compliance with the following covenants: • Minimum market value adjusted net worth of the group. • Minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio. The Company is currently in negotiations with Commerzbank AG to obtain waivers or to restructure the respective loan agreement. |
Unicredit Bank AG
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Debt Instrument [Line Items] | |
Covenant Compliance | Unicredit Bank AG (Loan agreement dated November 19, 2007). As of September 30, 2012, the Company was not in compliance with the following covenants: • Maximum total liabilities to EBITDA ratio. • Minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio. On November 30, 2012, the Company entered into a loan supplemental agreement and agreed, subject to several conditions discussed at the end of this note, to amended terms with Unicredit Bank AG, as described below: • To defer a portion of eight of its scheduled quarterly installments. After exercising the deferral option, the outstanding loan amount as of September 30, 2012, of $26.087 million will be repaid in 8 consecutive quarterly installments of $0.500 million, followed by 8 consecutive quarterly installments of $1.356 million, plus a balloon repayment of $11.243 million payable simultaneously with the final installment in the third quarter of 2016. • The loan bears interest at LIBOR plus a margin, which, from November 30, 2012 (the date of the supplemental agreement), will increase from 2.25% to (i) 2.75% on the outstanding amount of the loan, less any amounts that are deferred, and (ii) 5.00% on the amounts of the loan that have been deferred. • The ratio of total liabilities to EBITDA is waived from September 30, 2012, until December 31, 2013, inclusive. • The minimum requirement of market value adjusted net worth of the group is waived from September 30, 2012, until December 31, 2013, inclusive. • The leverage ratio is waived from September 30, 2012, until December 31, 2013, inclusive. • The aggregate fair market value of mortgaged vessels to outstanding loan ratio is waived from September 30, 2012, until December 31, 2013, inclusive. Based on the supplemental agreement dated November 30, 2012, and subject to the conditions described at the end of this note, the bank waived the breach of the maximum total liabilities to EBITDA ratio and the breach of the minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio that were outstanding as of September 30, 2012. |
Bank of Scotland Plc
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Debt Instrument [Line Items] | |
Covenant Compliance | Bank of Scotland Plc (Loan agreement dated December 4, 2007). As of September 30, 2012, the Company was not in compliance with the following covenants: • Maximum leverage ratio. • Minimum working capital. • Minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio. On November 30, 2012, the Company entered into a second amending and restating agreement and agreed, subject to several conditions discussed at the end of this note, to amended terms with Bank of Scotland Plc. As of September 30, 2012, the outstanding loan amount of the respective facility was $42.1 million. The terms and conditions of the second amending and restating loan agreement, subject to the conditions described at the end of this note, are as follows: • An extension of the facility to July 2015. • The Company has agreed to an advance payment of $2.840 million in full and final settlement of the portion of the loan of one of the syndicate members equal to $4.733 million. The advance payment of $2.840 million was executed on December 10, 2012. The effect of the settlement will be accounted for in the fourth quarter of 2012. • After the agreed advance payment of $2.840 million and the full and final settlement of the portion of the loan of $4.733 million, the outstanding $37.367 million is required to be repaid in 7 consecutive quarterly installments of $0.750 million commencing from December 9, 2012, followed by 4 consecutive quarterly installments of $1.000 million, plus a balloon repayment of $28.117 million payable on July 9, 2015. • The loan bears interest at LIBOR, plus a margin of 2.75%. • The Company shall maintain at all times with the lender, cash equivalents in an amount of no less than $0.5 million per mortgaged vessel. • The Company shall maintain at all times liquid assets of no less than $0.5 million per vessel. • The leverage ratio shall not be greater than 0.80:1.00 until December 31, 2014 and 0.75:1.00 thereafter. • The minimum requirement of market value adjusted net worth of the group shall not be less than $75.0 million. • The aggregate fair market value of the mortgaged vessels shall exceed 65% of the outstanding loan from March 31, 2013 until September 30, 2013, 70% until December 31, 2013, 85% until June 30, 2014, 95% until December 31, 2014 and 100% thereafter. Based on the second amending and restating agreement dated November 30, 2012, and subject to the conditions described at the end of this note, the bank waived the breach of the maximum leverage ratio, the breach of the minimum working capital and the breach of the minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio that were outstanding as of September 30, 2012. |
Bank of Ireland
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Debt Instrument [Line Items] | |
Covenant Compliance | Bank of Ireland (Loan agreement dated March 30, 2009). As of September 30, 2012, the Company was not in compliance with the following covenants: • Maximum aggregate financial indebtedness to EBITDA ratio. • Minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio. On November 28, 2012, the Company entered into a loan supplemental agreement and agreed, subject to several conditions discussed at the end of this note, to amended terms with Bank of Ireland, as discussed below: • To extend the respective loan agreement from the second quarter of 2014 to the second quarter of 2017. The outstanding loan amount as of September 30, 2012, of $15.150 million is required to be repaid in 7 consecutive quarterly installments of $0.350 million, followed by 12 consecutive quarterly installments of $1.000 million, plus a balloon repayment of $0.700 million payable simultaneously with the final installment in the second quarter of 2017. • The loan bears interest at LIBOR, plus a margin of 2.50%. • The Company shall maintain at all times with the lender, cash equivalents in an amount of no less than $750,000. • The ratio of the aggregate financial indebtedness to EBITDA is waived until December 31, 2014 and thereafter, shall not be greater than 5.0:1.0. • The minimum requirement of market value adjusted net worth of the group is waived until December 31, 2014 and thereafter, shall not be less than $50.0 million. • The leverage ratio is waived until December 31, 2014 and thereafter, shall not be greater than 0.8:1.0. • The aggregate fair market value of mortgaged vessels to outstanding loan ratio is waived until December 31, 2014 and thereafter, shall exceed 110%. Based on the supplemental agreement dated November 28, 2012, and subject to the conditions described at the end of this note, the bank waived the breach of the maximum aggregate financial indebtedness to EBITDA ratio and the breach of the minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio that were outstanding as of September 30, 2012. |
HSH Nordbank AG
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Debt Instrument [Line Items] | |
Covenant Compliance | HSH Nordbank AG (Loan agreement dated July 31, 2008). As of September 30, 2012, the Company was not in compliance with the following covenant: • Minimum market value adjusted net worth of the group. The Company is currently in negotiations with HSH Nordbank AG to obtain waivers or to restructure the respective loan agreement. |
HSBC Bank Plc
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Debt Instrument [Line Items] | |
Covenant Compliance | HSBC Bank Plc (Loan agreement dated July 2, 2010). As of September 30, 2012, the Company was not in compliance with the following covenant: • Minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio. On November 30, 2012, the Company entered into a loan supplemental agreement and agreed, subject to several conditions discussed at the end of this note, to amended terms with HSBC Bank Plc effective as from November 30, 2012, as discussed below: • From November 30, 2012 (the date of the supplemental agreement) until December 31, 2013, the margin will increase from 2.60% to 3.00%, and thereafter, decrease back to 2.60% until the final maturity. • The ratio of the total liabilities to EBITDA is waived until December 31, 2013 and thereafter, shall not exceed 7.0:1.0. • The ratio of EBITDA to interest expense is waived until December 31, 2013 and thereafter, shall not be less than 2.5:1.0. • The minimum requirement of market value adjusted net worth of the group shall be at least $50.0 million until December 31, 2013 and $100.0 million thereafter. • The ratio of total liabilities to value adjusted total assets is waived until December 31, 2013 and thereafter, shall not be greater than 0.8:1.0. • The aggregate fair market value of mortgaged vessels shall exceed 105% of the outstanding loan ratio until December 31, 2013, 110% until December 31, 2014 and 120% thereafter. Based on the supplemental agreement dated November 30, 2012, and subject to the conditions described at the end of this note, the bank waived the breach of the minimum aggregate fair market value of mortgaged vessels to outstanding loan ratio that was outstanding as of September 30, 2012. |
Nordea Bank Finland Plc
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Debt Instrument [Line Items] | |
Covenant Compliance | Nordea Bank Finland Plc (Loan agreement dated May 5, 2011). As of September 30, 2012, the Company was not in compliance with the following covenants: • Maximum aggregate financial indebtedness to EBITDA ratio. • Minimum working capital. The Company is currently in negotiations with Nordea Bank Finland Plc to obtain waivers or to restructure the respective loan agreement. In addition, due to the delay in the delivery of Hull no. 625 (refer to Note 5), the vessel is now expected to be delivered after the availability period of the respective syndicated secured facility. The Company is currently in discussions with its lenders on extending the availability period. |
All company's Lenders
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Debt Instrument [Line Items] | |
Amended Facilities Conditions | All the above mentioned agreements that have been entered into subsequent to September 30, 2012, are subject to a number of conditions, including: • All documentation to be satisfactory completed. • An equity increase of minimum $10.0 million within 90 days after the signing of the respective documentation. • All lenders agreeing to similar restructuring terms and granting similar waivers and terms. Therefore, until these conditions are met, the Company’s long-term debt and the associated restricted cash, deferred financing fees and interest rate swap liabilities, have been classified as current as of September 30, 2012. |
Earnings per share ("EPS") (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Earnings Per Share (EPS) [Abstract] | |||||||||||||||||||||||||||||||||||||
Basic EPS ? Class A Common Shares |
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Capital Structure (Details)
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0 Months Ended | 9 Months Ended |
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Nov. 05, 2012
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Sep. 30, 2012
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Shareholders' equity | ||
Ten for one reverse stock split description | 10-for-1 reverse stock split. Effective as of the close of trading on November 5, 2012, the Company effected a 10-for-1 reverse stock split of its issued and outstanding common shares. The common shares commenced trading on the New York Stock Exchange on a split-adjusted basis upon the open of trading on November 6, 2012. The reverse stock split was approved by shareholders at the Company’s 2012 Annual General Meeting of Shareholders held on October 24, 2012 and by the Company’s Board of Directors on October 24, 2012. The reverse stock split reduced the number of the Company’s issued and outstanding common shares from 60,994,464 to 6,099,442 and affected all issued and outstanding common shares, as well as common shares underlying stock options outstanding immediately prior to the effectiveness of the reverse stock split. The number of the Company’s authorized common shares was not affected by the reverse split. No fractional shares were issued in connection with the reverse stock split. Shareholders who would have otherwise held a fractional share of the Company’s Common Stock as a result of the reverse stock split received a cash payment in lieu of such fractional share. All share and per share amounts disclosed in the accompanying unaudited interim condensed consolidated financial statements give effect to the respective stock split retroactively, for all the periods presented. |
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Ten for one reverse stock split | 10-for-1 | |
Equity incentive plan impact of reverse stock split description | Equity incentive plan. As discussed in Note 16 of the Company’s consolidated financial statements for the year ended December 31, 2011 included in the Company’s Annual Report, the Company has adopted an equity incentive plan, under which the officers, key employees and directors of the Company will be eligible to receive option to acquire shares of Class A Common Shares. On October 15, 2012, the Company increased the number of shares to be reserved for issuance under the plan from 5,500,000 to 9,966,733 Class A Common Shares, which, after the 10-for-1 reverse stock split discussed above, was adjusted to 996,673 Class A Common Shares. |
Basis Of Presentation And General Information (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Basis of Presentation and General Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vessel Owning Subsidiaries |
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Newbuildings |
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Non-Vessel Owning Subsidiaries |
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Fair Value Disclosures - Derivatives Designated As Hedging Instruments (Table 2) (Details) (USD $)
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9 Months Ended |
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Sep. 30, 2012
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Interest rate swaps - Realized Loss | $ (100,318) |
Interest and finance costs (Location of Gain / (Loss) Reclassified from Accumulated Other Comprehensive Gain /(Loss) in Statement of Operations (Effective Portion))
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Interest rate swaps - Realized Loss | $ (100,318) |
Vessels, Net (Table) (Details) (USD $)
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9 Months Ended | |
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Sep. 30, 2012
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Sep. 30, 2011
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Property Plant And Equipment [Line Items] | ||
Balance December 31, 2011 | $ 268,608,363 | |
Depreciation for the period | (12,311,777) | (24,888,317) |
Balance September 30, 2012 | 302,415,085 | |
Vessel Cost
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Property Plant And Equipment [Line Items] | ||
Balance December 31, 2011 | 305,592,515 | |
Newbuilding deliveries | 46,019,408 | |
Balance September 30, 2012 | 351,611,923 | |
Accumulated Depreciation
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Property Plant And Equipment [Line Items] | ||
Balance December 31, 2011 | (36,984,152) | |
Depreciation for the period | (12,212,686) | |
Balance September 30, 2012 | (49,196,838) | |
Net Book Value
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Property Plant And Equipment [Line Items] | ||
Balance December 31, 2011 | 268,608,363 | |
Newbuilding deliveries | 46,019,408 | |
Depreciation for the period | (12,212,686) | |
Balance September 30, 2012 | $ 302,415,085 |
Basis Of Presentation And General Information (Details)
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0 Months Ended |
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Nov. 05, 2012
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Basis of Presentation and General Information [Abstract] | |
Ten for one reverse stock split | 10-for-1 |
Fair Value Disclosures - Measured on a Recurring Basis (Table) (Details) (USD $)
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Sep. 30, 2012
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Dec. 31, 2011
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Derivatives Fair Value [Line Items] | ||
Interest rate swaps - liability | $ 3,330,121 | $ 3,897,519 |
Significant Other Observable Iputs (Level 2)
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Derivatives Fair Value [Line Items] | ||
Interest rate swaps - liability | $ 3,330,121 | $ 3,897,519 |
Earnings per Share ("EPS") (Details)
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0 Months Ended | 9 Months Ended | |||
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Nov. 05, 2012
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Sep. 30, 2012
Stock Option
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Sep. 30, 2011
Stock Option
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Sep. 30, 2012
Non Vested Shares
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Sep. 30, 2011
Non Vested Shares
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Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Anti-dilutive securities | 3,200 | 3,200 | 119,063 | 119,748 | |
Ten for one reverse stock split | 10-for-1 |
Interest Rate Swaps (Table) (Details) (USD $)
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9 Months Ended | |
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Sep. 30, 2012
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Dec. 31, 2011
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Derivative [Line Items] | ||
Notional amount | $ 134,937,563 | |
Cash flow hedge losses to be reclassified into statement of operations within the next 12 months | 282,246 | |
Bank of Scotland Plc - Not Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | Dec. 21, 2007 | |
Termination Date | Dec. 21, 2012 | |
Notional amount | 50,000,000 | 50,000,000 |
Fixed rate | 5.000%, if 3-month LIBOR is greater than 5.000%3-month LIBOR, if 3-month LIBOR is between 3.770% and 5.000%3.770%, if 3-month LIBOR is less than 3.770% | |
Floating rate | 3-month LIBOR | |
Unicredit Bank AG - Not Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | Aug. 27, 2010 | |
Termination Date | Aug. 27, 2015 | |
Notional amount | 48,450,000 | 56,100,000 |
Fixed rate | 2.465% | |
Floating rate | 3-month LIBOR | |
Reduction in notional amount | 2,550,000 | |
HSBC Bank Plc - Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | Apr. 10, 2012 | |
Termination Date | Apr. 10, 2017 | |
Notional amount | 5,640,000 | 0 |
Fixed rate | 1.485% | |
Floating rate | 3-month LIBOR | |
Reduction in notional amount | 120,000 | |
HSH Nordbank AG - Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | May 08, 2012 | |
Termination Date | May 05, 2017 | |
Notional amount | 11,250,000 | 0 |
Fixed rate | 1.22% | |
Floating rate | 3-month LIBOR | |
Reduction in notional amount | 187,500 | |
Nordea Bank Finland Plc - Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | May 04, 2012 | |
Termination Date | May 31, 2017 | |
Notional amount | 7,005,917 | 0 |
Fixed rate | 1.14% | |
Floating rate | 3-month LIBOR | |
Reduction in notional amount | 120,792 | |
Nordea Bank Finland Plc - Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | Jun. 18, 2012 | |
Termination Date | May 04, 2017 | |
Notional amount | 6,966,646 | 0 |
Fixed rate | 1.01% | |
Floating rate | 3-month LIBOR | |
Reduction in notional amount | 120,115 | |
HSH Nordbank AG - Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Effective date | Aug. 06, 2012 | |
Termination Date | May 05, 2017 | |
Notional amount | 5,625,000 | 0 |
Fixed rate | 0.98% | |
Floating rate | 3-month LIBOR | |
Reduction in notional amount | 93,750 | |
Total Not Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Notional amount | 98,450,000 | 106,100,000 |
Total Qualifying For Hedge Accounting
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Derivative [Line Items] | ||
Notional amount | $ 36,487,563 | $ 0 |
Basis of Presentation and General Information
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Basis of Presentation and General Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and General Information | 1. Basis of Presentation and General Information
Basis of Presentation: Paragon Shipping Inc. (“Paragon”) is a public company incorporated in the Republic of the Marshall Islands on April 26, 2006 and is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carriers. In December 2006, Paragon established a branch in Greece under the provision of Law 89 of 1967, as amended.
The accompanying unaudited interim condensed consolidated financial statements include the accounts of Paragon Shipping Inc., and its wholly-owned subsidiaries (collectively the “Company”) as discussed below.
Drybulk Vessel Owning Subsidiaries:
Newbuildings
Non-Vessel Owning Subsidiaries:
Effective November 5, 2012, the Company effected a 10-for-1 reverse stock split on its issued and outstanding common stock (refer to Note 11). All share and per share amounts disclosed in the accompanying unaudited interim condensed consolidated financial statements give effect to the respective stock split retroactively, for all the periods presented.
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the management of the Company, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, operating results and cash flows have been included in the accompanying unaudited interim condensed consolidated financial statements. Interim results are not necessarily indicative of results that may be expected for the year ending December 31, 2012. These financial statements should be read in conjunction with the consolidated financial statements and footnotes for the year ended December 31, 2011 included in the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on April 27, 2012 (“Annual Report”). The Company, in accordance with ASU 2011-05 “Comprehensive Income, Presentation of Comprehensive Income” (Topic 220), effective for the Company for this interim period has elected to present net income / (loss) and other compressive income / (loss) in a single continuous statement of comprehensive income / (loss) in its unaudited interim condensed consolidated financial statements.
The Company outsources the technical and commercial management of its vessels to Allseas Marine S.A. (“Allseas”), a related party wholly owned by Mr. Michael Bodouroglou, the Company’s Chairman, President, Chief Executive Officer and Interim Chief Financial Officer. |
Commitments and Contingencies (Table) (Details) (USD $)
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Sep. 30, 2012
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To September 30, | |
2013 | $ 2,525,725 |
2014 | 112,865,819 |
Total | $ 115,391,544 |